Claimant v Dapper Collection Limited (in CVL)
Outcome
Individual claims
The tribunal found that Mr Lake was an employee of the 1st respondent from incorporation until dismissal by reason of redundancy when the business closed. Despite being a director and shareholder, he worked full-time in the retail unit as General Manager under the operational control of Mr Lawrence, who managed all governance and financial matters. The tribunal concluded there was mutuality of obligation and Mr Lake submitted to oversight and control, making him entitled to redundancy pay from the Redundancy Payment Service.
The tribunal found Mr Lake was entitled to any amounts outstanding from the 1st respondent as an employee. Where these cannot be paid by the insolvent 1st respondent, the Redundancy Payment Service must compensate to the extent claims are covered by the scheme.
Facts
Two directors and shareholders of an insolvent retail company claimed redundancy payments from the Redundancy Payment Service. Mr Lawrence had controlled the operational, financial and governance aspects of the company throughout its life. Mr Lake worked full-time as General Manager in the retail unit, providing strategic vision but leaving all operational management to Mr Lawrence. Both had written employment contracts and were paid partly by salary and partly by dividends. The Secretary of State argued both claimants were not employees but directors running the business.
Decision
The tribunal dismissed Mr Lawrence's claim, finding he lacked mutuality of obligation as he was the controlling mind with no oversight, able to reduce his hours without consequence. The tribunal found Mr Lake was an employee throughout, as despite being a director and majority shareholder from 2018, he worked under Mr Lawrence's operational control, was required to fulfil set hours, and would face management intervention if performance fell. His willingness to accept reduced pay in hard times did not negate his employee status. Remedy to be determined at a later hearing.
Practical note
Being a director and even majority shareholder does not automatically preclude employee status if the individual works under the operational control of another director who manages the company's governance and finances, demonstrating genuine mutuality of obligation and subordination.
Legal authorities cited
Statutes
Case details
- Case number
- 2301783/2024
- Decision date
- 23 February 2025
- Hearing type
- full merits
- Hearing days
- 1
- Classification
- contested
Respondent
- Sector
- retail
- Represented
- No
- Rep type
- lay rep
Employment details
- Role
- General Manager (Mr Lake); Director/Secretary (Mr Lawrence)
- Salary band
- Under £15,000
- Service
- 10 years
Claimant representation
- Represented
- No